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The US government is becoming more vigilant around cryptocurrencies.
Lawmakers are specifically becoming aware of the possibility that nation states could use cryptocurrency to circumvent US sanctions. A bill was recently introduced by a bipartisan group of US senators that is initially targeting tighter sanctions on the petro, Venezuela’s attempt at a national cryptocurrency backed by oil reserves.
The proposed law states “All transactions by a United States person or within the United States that relate to, provide financing for, provide software for, or otherwise deal in any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela are prohibited beginning on the date of the enactment of this Act.”
The specific language is important for two reasons:
The bill is targeting any digital offering by the Venezuelan government. Given the nature of open source software, coupled with the common pseudonymity of crypto, it would not be hard to imagine a world where Venezuela’s government was behind a project but no one knew. How will this be enforced or audited?
The bill explicitly states it would be illegal to “provide software for” the anticipated target of the sanctions. This brings into question how strictly it could or would be enforced. For example, if Facebook is used by the Venezuelan government to promote the petro, is Facebook liable for providing software? What if Venezuela’s government uses a developer tool like Github to write the software code for their cryptocurrency — is Github in violation of this law?
There are many more questions than answers at this point. One thing is clear though: the rise of cryptocurrencies will present unique macro economic and geopolitical challenges. Thankfully, our lawmakers appear to be taking a patient and measured approach so far. It will be imperative that they continue to do so.
As with all great technology evolutions, the same thing that brings power to the people can be used by those in power to further extend their influence and dominance. Crypto has the potential to create economic, social and political equality. The question is, do those in power actually want that?
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